Situs Newswatch 7/7/2017

Driverless Cars Boon to Garage, Parking Lot, CRE Businesses

Talk about unintended consequences: Believe it or not, the fast-approaching self-driving car business may actually benefit garages and parking lots, while providing a boon to the CRE industry.

Waymo, which is Google’s driverless car business, has hired Avis Budget Group (yes, the rental car folks) to store and service self-driving cars in garages owned by Avis.

Other parking facility owners have a great deal to gain from this futuristic business.

“Storage and maintenance will mostly like be best suited for parking structures/lots to accommodate self-driving car fleets,” write Ted & Alan Anglyn, of Parking Property Advisors. “While rental car agencies and other fleet management companies are natural matches, their properties are often not in great locations, which somewhat limits both the capacity and the ability to accommodate growth. While these companies may be able to service an airport’s rental needs, they will likely struggle to handle all the cars needed to support ride-sharing for an entire city. In turn, parking operators are in a position to help and benefit in this arena.”

Google’s Waymo said it chose Avis for its experience and its locations across the U.S. and abroad, which can help Waymo expand its program to other cities. Waymo has 100 Chrysler Pacifica self-driving minivans and has ordered another 500 of the vans from Fiat Chrysler Automobiles NV, which Waymo equips with computers and sensors to make them self-driving. Waymo’s cars, which also include Lexus SUVs, have driven more than 3 million miles in testing across California, Washington, Texas and Arizona.

The outlook for the garage and parking lot business looks bright, according to Ted & Alan Anglyn: “Future arrangements for fleets of driverless cars will need to find parking facilities where companies can charge fleets of electric cars via fast-charging electrical stations. Trained technical staff will be required to work at the facilities to repair and connect cars, clean the cars, and provide appropriate security. All of this is only going to make the parking facility business even more desirable.”

Before making any move in the parking facility space, you should consult with an expert adviser such as Situs.

Why Your Next Car May Look Like a Living Room
With driverless cars moving closer to reality, car makers and designers are imagining a future where car interiors look more like a high-tech living room.
This video originally appeared on WSJ Video

Self-Driving Cars Just a Fantasy? — Think Again!
For most people, self-driving cars are just an abstraction, something they read about occasionally in the press but still consider a far-off, futuristic fantasy. They read the headlines and scoff, “Not in my lifetime.” But the events of this past month may help put a lot of that skepticism to rest. There was a flurry of activity in both Congress and the private sector over the past few weeks, signaling a key shift in the trajectory of self-driving cars and proving that these vehicles are much closer to reality than most people think.

Experts whose job it is to pay close attention to this emerging technology have been impressed with the pace of developments in the last few weeks. “Out of the past three years that I’ve been researching [autonomous vehicle] policy, this is by far the most important month of Congressional action and partnerships I’ve seen yet,” said Greg Rogers, a policy analyst at the Eno Center for Transportation. “What we’re seeing right now is that autonomous vehicles are moving from their infancy into their adolescence.”

First, and most significantly, the first federal legislation to regulate self-driving cars in the US was introduced on June 20. These bills — there are 14 of them — would give the US National Highway Traffic Safety Administration (NHTSA) the power to increase the number of self-driving cars on public roads. And they would pre-empt the current patchwork of state laws regarding the enforcement of autonomous driving. Automakers and the big tech companies are in favor of the bills for two main reasons: they want to get their robot cars on the road faster than their competitors, and they would rather abide by one overarching set of federal laws than 50 individual state laws.

And even more surprising, there appears to be some bipartisan consensus around these bills, proving that even in a gridlocked, polarized political environment, Silicon Valley and the big automakers still hold enormous sway over politicians. “Silicon Valley is still the golden child of America — the actual shining city on a hill, with Detroit just a little bit behind,” Rogers said. “(The) GOP naturally wants to seize on this opportunity to build up an industry.”

Still, there are a few dissenting voices. Safety and consumer advocates decry the bills as an enormous giveaway to the companies Waymo (née Google) and Uber that are building and testing self-driving cars. Their opposition could hurt the passage of these bills, especially since the motivating force behind self-driving cars is their promise to reduce or eliminate traffic fatalities.

read more: The Verge

Changes to Credit Scoring Good for Housing, Mortgage Industries & Homebuyers

Collingwood Group Chairman Tim Rood talked about this and more on Fox Business’ “Mornings with Maria.”

Fox Business turns to The Collingwood Group for our expertise, shouldn’t you?
Contact us here to learn what we can do for your business.

All About Jobs
In just a couple of hours (8:30 a.m. ET) we get the most important economic data of the month: the Jobs Report (a.k.a.: Nonfarm Payrolls).

Not only will we know how many jobs were created in June, but the most important part of the report will be how much wages grew last month. Wage growth not only indicates whether workers are making more money, but also if inflation in the U.S. is picking up.

Inflation is a key component used by the Federal Reserve to determine their course of monetary policy.

The economy is expected to have added 176,500 jobs in June, according to economists surveyed by FactSet. Roughly 138,000 jobs were added to the U.S. economy in May. The unemployment rate is anticipated to have held at 4.3%, while hourly earnings are expected to increase 0.3% month on month.

read more: CNBC

Situs RERC’s Ken Riggs discusses how commercial real estate is heading into some turbulence and price headwinds with Real Estate Finance & Investment (REFI).

Download the full article here.

Non-Traded REITs: Go Mainstream or Die
Improving transparency and liquidity, as well as lowering fees, are at the top of the to-do list for the non-traded REIT market in 2017, challenges that will force the industry to transform and usher in new ways of doing business and new types of sponsors.

Fundraising for the sector — which began to decline in 2013 — plummeted dramatically in 2016 due to the combination of impending regulatory changes and lackluster performance of the sector. Non-traded REITs attracted only $6.4 billion in 2016, down nearly 75 percent from the $24.6 billion raised in 2013, according to Robert A. Stanger & Co.

The situation could get worse before it gets better. Stanger CEO Kevin T. Gannon, speaking at the IMN Non-Traded REIT & Retail Investment Symposium in New York last week, forecast capital raising to decline further to $5.7 billion this year. Another ominous sign came last week, when industry leader W.P. Carey announced it was exiting the non-traded REIT business after more than 40 years to focus on its net-leased real estate portfolio.

New regulations have played a big role in the sector’s demise. One is the Department of Labor’s “fiduciary rule,” which went into effect in June after being delayed by the new administration, and requires investment advisors to justify the high fees they charge retail investors. Another is the Securities and Exchange Commission’s Financial Industry Regulatory Authority (FINRA) 1502, which requires broker-dealers to provide investors with a fair estimated value of their holdings.

The new regulations have made the traditional broker-dealer network reluctant to steer clients to non-traded REITs. Brokers complain that they don’t get properly compensated, the rules are vague and they don’t protect them from litigation. But that’s just a part of the industry’s problems. Investors are turned off by high fees and illiquidity, and performance has been weak. Gannon said returns for non-traded REITs were 5.6 percent in 2016, compared to 9.6 percent for private real estate and 12.0 percent for the S&P Index.

read more: Commercial Property Executive

Millennial Majority
New detailed estimates show the nation’s median age — the age where half of the population is younger and the other half older — rose from 35.3 years on April 1, 2000, to 37.9 years on July 1, 2016.

“The baby-boom generation is largely responsible for this trend,” said Peter Borsella, a demographer in the Population Division. “Baby boomers began turning 65 in 2011 and will continue to do so for many years to come.”

When it comes to saving money, a lot of millennials are falling short: The majority of young people have less than $1,000 in their savings accounts, and a significant number have nothing at all.

Perhaps their spending habits could explain their lack of savings.

According to a new report from Charles Schwab, millennials spend more than other generations on comforts and conveniences like taxis, pricey coffee and dining out.

Sixty percent of millennials admit to spending more than $4 on coffee, 79 percent will splurge to eat at the hot restaurant in town and 69 percent buy clothes they don’t necessarily need.

The numbers are much lower in these categories for older generations. For instance, more than half of millennials shell out money for taxis and Ubers, compared to 29 percent of Gen Xers and 15 percent of boomers.

read more: Calculated Risk Blog

Residential Data Holds Down Construction Spending
Construction spending was essentially flat in May when compared to April. The U.S. Census Bureau says there were seasonally adjusted annualized expenditures of $1.23 trillion during the month on all types of construction.

The revised estimate for April was $1.23 trillion as well, but that resulted from a revision of the original sharp decline in spending reported for March, 1.4 percent, to -0.7 percent.  On a year-over-year basis total spending was up 4.5 percent.

Analysts polled by Econoday had expected an increase of 0.5 percent. Estimates ranged from no change to a positive 0.9 percent.

On a non-seasonally adjusted basis, total spending in May was $103.16 billion compared to $99.506 in April. For the first five months of 2017 the Bureau estimates spending at $469.2 billion, up 6.1 percent from expenditures at the same point in 2016.

Private spending overall was at a seasonally adjusted annual rate of $943.2 billion, a -0.6 percent change from April’s estimate of $949.3 billion, but up 6.2 percent compared to the previous May.  On a non-adjusted basis, private spending totaled $80.87 billion compared to $78.20 billion in April.  Year to date spending is 9.0 percent higher than a year earlier.

Private spending on residential construction fared little better than the overall numbers in May. On a seasonally adjusted basis, expenditures were $509.62 billion, a decrease of 0.6 percent month-over-month from $512.34 billion.  Spending was substantially higher than last May, an increase of 11.2 percent. Most of the monthly decline was attributed to multi-family construction, which fell by 3.3 percent (but remained 3.0 percent higher than in May 2016), while single-family construction fell by 0.3 percent. It too remained strong compared to last year, up 7.9 percent.

read more: News to Watch

Have a prosperous day ahead and a great weekend.

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